ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR - Currency: USD
ERIC gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 50 industry peers in the Communications Equipment industry. ERIC scores excellent on profitability, but there are some minor concerns on its financial health. ERIC has a bad growth rate and is valued cheaply.
1. Profitability
1.1 Basic Checks
In the past year ERIC was profitable.
ERIC had a positive operating cash flow in the past year.
Of the past 5 years ERIC 4 years were profitable.
ERIC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ERIC has a Return On Assets of 0.58%. This is in the better half of the industry: ERIC outperforms 64.00% of its industry peers.
The Return On Equity of ERIC (1.87%) is better than 66.00% of its industry peers.
The Return On Invested Capital of ERIC (14.44%) is better than 90.00% of its industry peers.
ERIC had an Average Return On Invested Capital over the past 3 years of 10.59%. This is below the industry average of 13.82%.
The last Return On Invested Capital (14.44%) for ERIC is above the 3 year average (10.59%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROIC | 14.44% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.59%
ROIC(5y)12.19%
1.3 Margins
ERIC has a Profit Margin of 0.65%. This is in the better half of the industry: ERIC outperforms 64.00% of its industry peers.
ERIC's Profit Margin has declined in the last couple of years.
ERIC's Operating Margin of 10.72% is fine compared to the rest of the industry. ERIC outperforms 78.00% of its industry peers.
ERIC's Operating Margin has improved in the last couple of years.
ERIC's Gross Margin of 46.21% is fine compared to the rest of the industry. ERIC outperforms 62.00% of its industry peers.
In the last couple of years the Gross Margin of ERIC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% |
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ERIC is creating value.
The number of shares outstanding for ERIC remains at a similar level compared to 1 year ago.
The number of shares outstanding for ERIC has been increased compared to 5 years ago.
ERIC has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of ERIC is 1.02, which is an excellent value as it means it would take ERIC, only 1.02 years of fcf income to pay off all of its debts.
ERIC has a better Debt to FCF ratio (1.02) than 76.00% of its industry peers.
A Debt/Equity ratio of 0.41 indicates that ERIC is not too dependend on debt financing.
ERIC's Debt to Equity ratio of 0.41 is on the low side compared to the rest of the industry. ERIC is outperformed by 60.00% of its industry peers.
Even though the debt/equity ratio score it not favorable for ERIC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Altman-Z | N/A |
ROIC/WACC2.39
WACC6.03%
2.3 Liquidity
ERIC has a Current Ratio of 1.09. This is a normal value and indicates that ERIC is financially healthy and should not expect problems in meeting its short term obligations.
ERIC has a worse Current ratio (1.09) than 80.00% of its industry peers.
ERIC has a Quick Ratio of 1.09. This is a bad value and indicates that ERIC is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.88, ERIC is not doing good in the industry: 74.00% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 |
3. Growth
3.1 Past
ERIC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -46.92%.
The earnings per share for ERIC have been decreasing by -17.01% on average. This is quite bad
ERIC shows a decrease in Revenue. In the last year, the revenue decreased by -1.79%.
Measured over the past years, ERIC shows a small growth in Revenue. The Revenue has been growing by 1.76% on average per year.
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
3.2 Future
Based on estimates for the next years, ERIC will show a very strong growth in Earnings Per Share. The EPS will grow by 29.89% on average per year.
The Revenue is expected to grow by 0.40% on average over the next years.
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.4%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
ERIC is valuated quite expensively with a Price/Earnings ratio of 34.96.
The rest of the industry has a similar Price/Earnings ratio as ERIC.
ERIC is valuated rather expensively when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
ERIC is valuated reasonably with a Price/Forward Earnings ratio of 12.00.
Based on the Price/Forward Earnings ratio, ERIC is valued cheaply inside the industry as 82.00% of the companies are valued more expensively.
ERIC is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.96 | ||
| Fwd PE | 12 |
4.2 Price Multiples
94.00% of the companies in the same industry are more expensive than ERIC, based on the Enterprise Value to EBITDA ratio.
98.00% of the companies in the same industry are more expensive than ERIC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.12 | ||
| EV/EBITDA | 6.63 |
4.3 Compensation for Growth
ERIC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ERIC may justify a higher PE ratio.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 58.42% in the coming years.
PEG (NY)0.13
PEG (5Y)N/A
EPS Next 2Y93.12%
EPS Next 3Y58.42%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.47%, ERIC has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.42, ERIC pays a better dividend. On top of this ERIC pays more dividend than 92.00% of the companies listed in the same industry.
ERIC's Dividend Yield is a higher than the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
5.2 History
On average, the dividend of ERIC grows each year by 22.02%, which is quite nice.
ERIC has been paying a dividend for at least 10 years, so it has a reliable track record.
As ERIC did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)22.02%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
573.48% of the earnings are spent on dividend by ERIC. This is not a sustainable payout ratio.
ERIC's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP573.48%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
8.04
-0.14 (-1.71%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner Change0%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap26.80B
Analysts56.55
Price Target8.58 (6.72%)
Short Float %1.68%
Short Ratio2.12
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.47% |
Yearly Dividend0.28
Dividend Growth(5Y)22.02%
DP573.48%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)19.55%
Min EPS beat(2)-10.72%
Max EPS beat(2)49.81%
EPS beat(4)2
Avg EPS beat(4)-132.41%
Min EPS beat(4)-588.91%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-35.54%
EPS beat(12)7
Avg EPS beat(12)-21.49%
EPS beat(16)9
Avg EPS beat(16)-14.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.28%
Min Revenue beat(2)-2.1%
Max Revenue beat(2)-0.45%
Revenue beat(4)1
Avg Revenue beat(4)-0.39%
Min Revenue beat(4)-2.1%
Max Revenue beat(4)1.67%
Revenue beat(8)1
Avg Revenue beat(8)-1.78%
Revenue beat(12)5
Avg Revenue beat(12)-0.75%
Revenue beat(16)7
Avg Revenue beat(16)-0.79%
PT rev (1m)0.92%
PT rev (3m)0.13%
EPS NQ rev (1m)0.21%
EPS NQ rev (3m)30.95%
EPS NY rev (1m)0%
EPS NY rev (3m)-4.16%
Revenue NQ rev (1m)-0.41%
Revenue NQ rev (3m)-3.19%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.96 | ||
| Fwd PE | 12 | ||
| P/S | 1.02 | ||
| P/FCF | 6.12 | ||
| P/OCF | 5.6 | ||
| P/B | 2.97 | ||
| P/tB | 11.02 | ||
| EV/EBITDA | 6.63 |
EPS(TTM)0.23
EY2.86%
EPS(NY)0.67
Fwd EY8.34%
FCF(TTM)1.31
FCFY16.33%
OCF(TTM)1.43
OCFY17.84%
SpS7.86
BVpS2.71
TBVpS0.73
PEG (NY)0.13
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.58% | ||
| ROE | 1.87% | ||
| ROCE | 18.28% | ||
| ROIC | 14.44% | ||
| ROICexc | 21.87% | ||
| ROICexgc | 62.61% | ||
| OM | 10.72% | ||
| PM (TTM) | 0.65% | ||
| GM | 46.21% | ||
| FCFM | 16.7% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.59%
ROIC(5y)12.19%
ROICexc(3y)14.83%
ROICexc(5y)17.86%
ROICexgc(3y)47.09%
ROICexgc(5y)43.4%
ROCE(3y)13.4%
ROCE(5y)15.43%
ROICexcg growth 3Y9.12%
ROICexcg growth 5Y7.91%
ROICexc growth 3Y-8.84%
ROICexc growth 5Y4.9%
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
F-Score7
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.41 | ||
| Debt/FCF | 1.02 | ||
| Debt/EBITDA | 0.94 | ||
| Cap/Depr | 36.59% | ||
| Cap/Sales | 1.55% | ||
| Interest Coverage | 10.63 | ||
| Cash Conversion | 122.12% | ||
| Profit Quality | 2589.32% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.88 | ||
| Altman-Z | N/A |
F-Score7
WACC6.03%
ROIC/WACC2.39
Cap/Depr(3y)47.04%
Cap/Depr(5y)51.35%
Cap/Sales(3y)1.94%
Cap/Sales(5y)2.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-46.92%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%60.24%
EPS Next Y267.53%
EPS Next 2Y93.12%
EPS Next 3Y58.42%
EPS Next 5Y29.89%
Revenue 1Y (TTM)-1.79%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%3.19%
Revenue Next Year0.35%
Revenue Next 2Y0.68%
Revenue Next 3Y1.13%
Revenue Next 5Y0.4%
EBIT growth 1Y48.21%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y11.76%
FCF growth 1Y126.71%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y82.12%
OCF growth 3Y5.8%
OCF growth 5Y22.35%